Forecasts project continued growth for aquaculture sector

Several recent industry reports on the current and forecast status of the global aquaculture industry over the next several years show an uptick in growth, revenues, and species diversity.

And in the United States the fish farming sector shows positive lift owing to the economic recovery; the continued slide of domestic capture fisheries; and increases in capital investments in aquaculture.

         According to a recent report provided to Aquaculture North America by the industry and market research firm IBISWorld, over the last three years US aquaculture has fared better than some wild fisheries which were negatively impacted by the Gulf oil spill in 2010.

         “Despite the publicity surrounding the 2010 Deepwater Horizon oil gusher in the Gulf of Mexico, the spill failed to adversely impact the Fish and Seafood Aquaculture industry,” the 2013 report explained.

“While the fishing industry, which depends on wild catches to drive revenue, experienced negative effects, aquaculture firms maintained business as usual given the inland nature of their captive-freshwater operations. In fact, the oil leak benefited the aquaculture industry, as demand shifted toward fish in light of a low wild seafood supply.”

         However, overall demand for seafood in the US has been hampered during the past five years. Domestic demand fell due to reduced per capita disposable income related to the recession. Additionally, a recession-related double-digit dip in 2009 curbed growth in exports, industry analysts explain.

Significant growth potential

         But because seafood demand is recovering, aquaculture products in the US market have significant growth potential over the coming five years, according to the report.

         “The industry is projected to experience price growth as a result of excess demand for seafood; however, the industry’s ability to take advantage of this potential is currently limited because of legislative stagnation for measures like the National Sustainable Offshore Aquaculture Act,” analysts stated in the report. “Still, growth potential remains on the back of rising demand from emerging economies, especially in Asia and Latin America. IBISWorld forecasts US industry revenue to increase at an annualized rate of 3.0% during the five years to 2018, reaching an estimated $1.4 billion.”

Global outlook

         Though international aquaculture markets are in a better position than their US counterparts because of fewer regulatory restrictions, the global aquaculture industry also declined during the economic crisis between 2008 and 2009, according to reports released by other research firms like MarketLine and Research and Markets in 2013.

         However, the global aquaculture market saw a positive trend with recovery in the world’s major economies and subsequent increase in production levels.

         The global market for aquaculture was valued at USD $135.10 billion in 2012 and is expected to reach USD $195.13 billion in 2019, growing at 5.1% from 2013 to 2019. In volume, global production was 66.5 million tons in 2012 and is expected to grow about 2.3% from 2013 to 2019.

         Volume of captured fish has been on a steady decline and is expected to be one of the primary factors driving global aquaculture production over the next few years. In addition, increasing consumer awareness regarding health benefits associated with consumption of fish and fish products is expected to boost aquaculture production within the forecast period.

Domestic shortfall

         According to the Department of Commerce, total seafood production in the US will fall 2.0 million tons short of domestic demand by 2025. The forecast deficit illustrates significant potential for the U.S. aquaculture industry, according to the IBISWorld report.

The US trade deficit in seafood could be offset by increasing the domestic aquaculture production from the current $900.0 million per year to $5.0 billion annually. Foremost, the three key areas of demand (consumer, processor and wholesaler) are forecast to increase, and the price of seafood is anticipated to keep pace.

         “Also, industry expansion into emerging market segments offers new revenue sources for existing producers. Last, new legislation could expand enterprise growth and lead the industry toward greater domestic self-sufficiency,” IBISWorld researchers wrote.

US Hurdles

         Producers in the US will continue to face competition from imports, which will likely offset increasing demand through 2018, according to IBISWorld. Imports will continue to challenge the viability of many US producers and limit growth in company numbers and employment. Exports, on the other hand, will likely offer some opportunities for firms positioned to participate in international trade.

         Recent trade agreements with Asian nations like South Korea and emerging demand from Latin American countries like Peru are projected to buoy export growth of 12.4% per year on average through 2018. Other forms of competition will come from wild fisheries and alternative sources of protein, like chicken and beef.

         “My wish is that they get rid of the hurdles and keep prices in line so consumers start buying more seafood,” said Ronald D. Calonica Director of Business Development at Global Food Technologies, Inc. (GFT) and its subsidiary of iPura. “We have been in a decline of consumption for approximately seven years overall. Between the economy, the Gulf Spill, which per the Gulf, we lost a small percent of consumers that will never eat seafood again because they don’t want to have to guess what’s in the bag. They would rather just buy something else.”

         IBIS World analysts were more positive about the outcome of seafood consumption over the next five years.

         “As domestic and foreign markets continue to shake off the effects of the recession, seafood will increasingly make up more of the population’s diet,” they said in their report.

         Demand may continue to rise, but farmed seafood prices will remain high because of high fish feed prices.

         “The price of farmed fish and seafood is forecast to remain high on the back of continually high feed prices. The growth of demand and oil prices that drove rises in animal feed prices over the past five years will continue through 2018,” stated the report’s authors.

– Erich Luening